Many employees live “paycheck to paycheck,” meaning that they usually fully expend one paycheck by the time the next is received. Because the full amounts of their paychecks are quickly consumed, they naturally wish to receive the maximum amount of net pay they are entitled to.
However, many employees' paychecks are not optimized so as to yield the maximum amount of value. For example, an employee who regularly receives a tax refund from the US Treasury or a state government probably has too much tax being withheld—money that he or she could use during the year instead of having to wait until his or her tax return is processed. Similarly, an employee may be paying more than necessary for benefits, or may not be utilizing benefits that best suit their needs—such as medical insurance, dental insurance and so on, and may be able to receive similar coverage for less money or may be able to save money by using a Flexible Spending Account (FSA) or Health Spending Account (HSA) for healthcare needs.
Other employees that may not be living paycheck to paycheck may still be disadvantaged by a poor choice of benefit elections and paycheck disbursements. For example, they may not be maximizing their 401K contributions, may not be electing or paying for adequate health insurance for their growing family, etc.
In short, many employees' paychecks may involve payments, deductions and/or other disbursements that are unsuitable or inadequate for their actual needs. Because of the limited information often provided to employees with their paychecks, they may be unaware of the problem. Although their physical paycheck may indicate their gross pay, net pay and some summary of the deductions, there is no indication as to whether a given deduction could be reconfigured to increase the net pay, or what the potential changed paycheck could look like if it were reconfigured.
In addition, changing an employee's deductions or disbursements is not a trivial task. In addition to the likelihood that an employee may not even be aware of the details of a given deduction, there may be a plethora of options available for the employee to research (e.g., different insurance plans, different withholding options) and the administrative procedures involved in making changes make take some time.
Human resources personnel are typically prohibited from suggesting one course of action over another (e.g., choosing between insurance plans or investment options, selecting a W4 withholding value), thereby leaving an employee to make important decisions all alone. Also, an employee cannot easily determine how a change to one disbursement will affect her bottom line (i.e., net pay) until the change has been implemented and a new paycheck is issued.
Thus, for various reasons, from the difficulty of fully understanding the disbursements of a paycheck, through the complexity involved in choosing among disbursement options and the uncertainty of the effect that a particular change will have, many employees receive paychecks that could be better tailored to their needs (e.g., to increase their net pay).